Former Currency Trader Charged in $21 Million Ponzi Scheme

The Securities and Exchange Commission charged a San Diego man with operating a Ponzi scheme under the guise of a foreign currency trading firm.  Jeffrey Alan Lowrance, arrested earlier this year in Peru,was charged in his operation of a specialized currency trading operation that authorities allege was in fact an elaborate Ponzi scheme.  Lowrance also entered a not guilty plea to federal charges of mail fraud, wire fraud, and money laundering, each of which carry a twenty-year maximum prison sentence.

Lowrance operated First Capital Savings & Loan, which promised huge profits from a sophisticated foreign currency trading strategy.   Investors were promised monthly returns up to 7.15%, assured their investments were guaranteed, and in some instances, given forged letters of credit.  At least $21 million was raised from investors in 26 states.  Lowrance also attracted investors through "USA Tomorrow," a start-up newspaper he created.  Yet, instead of a lucrative foreign currency trading operation, Lowrance orchestrated an elaborate Ponzi scheme that used new investor funds to pay returns to older investors. Even as the scheme began to unravel in late 2008 as the financial markets faced increasing turmoil, authorities allege Lowrance raised an additional $1 million through February 2009 by advertising the scheme's promise of high returns.

In addition to SEC and federal charges, Lowrance also faces charges from the Commodity Futures Trading Operation, filed on July 14, 2011.  A copy of the SEC complaint is here.